While stock may be used instead of monetary motivation, management may inflate the value of these and gain more from employees with less investment. Furthermore, a buyback strategy may result in a negative external business image for the company when stock is later revealed to be of lower value than merited by the buyback price.
3. I believe that stock buybacks are indeed a strategy. A strategy can be defined as a plan of action to further the business advantage and image of a company. As seen above, while the strategy may be to the advantage or disadvantage of the investor, it is always used to the advantage of the company buying back stock. Some companies include this strategy as part of their yearly business plan and projections for the future. The disclosure of buying back strategies can also be used as a tool to encourage future investments. As such, it is an action to further the company's business advantage, which could then be classified as a strategy.
4. Whole Foods and...
In the case of the former, the company produces products well-known for its quality. Its buyback strategy therefore revealed a good indication of future growth in value and stock. In the case of Intel, the company has combined its buyback strategy with dividends, making it particularly beneficial for investors. Investors are empowered by multiple options from which they can choose what suits them best. Like Whole Foods, Intel features products that have a high customer confidence. Hence their external image is good, enhancing confidence in both their product and strategy. The purpose of Target's strategy, on the other hand, appears to have benefited the company more than investors, as the buyback strategy inflated stock values to a higher than true value. The value investors drew from the buyback strategy was therefore minimal. Target may also have been somewhat hasty in implementing its buyback strategy.
